In September, I posted (see here) about H.R. 2152 – the Foreign Business Bribery Prohibition Act of 2009.
Big picture, under the proposed law, any “foreign concern” (defined to mean any person other than an issuer, domestic concern or U.S. person) that violates the FCPA’s anti-bribery provisions would be liable to any issuer, domestic concern or U.S. person for damages caused by the FCPA violation.
Under the proposed law, a plaintiff would need to prove that: (i) the “foreign concern” violated the FCPA’s anti-bribery provisions; and (ii) the violation prevented the plaintiff from obtaining or retaining business and assisted the foreign concern in obtaining or retaining business.
In other words, if a U.S. company can prove that it lost business because a “foreign concern” gained that same business by violating the FCPA, the U.S. company could bring a lawsuit seeking damages.
Under the proposed law, the damages would be the higher of the total amount of the contract or agreement that the “foreign concern” gained in obtaining or retaining the business or the total amount of the contract or agreement that the plaintiff failed to gain. To sweeten the pot, the proposed law requires treble damages along with attorneys fees and costs.
What got me thinking about H.R. 2152 back in September was a NY Times Article titled “China Spreads Aid in Africa, With a Catch for Recipients” (see here).
What has me thinking about H.R. 2152 again is a recent article in the Washington Post titled “Afghan Minister Accused of Taking Bribe” (see here).
The article alleges that the current Afghan Minister of Mines accepted an approximate $30 million bribe around December 2007 from China Metallurgical Group Corp. in exchange for awarding a $2.9 billion contract to extract copper from one of the largest unexploited deposits in the world.
The article mentions that U.S. officials worked on the bidding process for this project and that, because of the alleged bribe payment, the Minister did not give a “fair hearing to the proposals of Western firms.”
It would thus seem that a U.S. company was competing for this project and, in fact, other media reports have suggested that Phelps Dodge bid on the project.
If so, and if H.R. 2152 were to enacted, Phelps Dodge (or any other U.S. company that bid) would have a cause of action against China Metallurgical Group Corp.
Given the damages provision of H.R. 2152, a recovery could be north of $8.7 billion … plus attorney fees and costs. Ye gods that’s a lot of money!
If H.R. 2152 ever “gets out of committee,” supporters of the bill can now point to two recent examples demonstrating a need for the bill.
What I find most interesting about H.R. 2152 is that if enacted, I think it will be a “game-changer” in terms of FCPA enforcement.
Private plaintiffs will have to prove every element of an FCPA anti-bribery violation.
A private plaintiff will not carry the “big stick” that the enforcement agencies’ carry (which means in the corporate context, that nearly all FCPA enforcement actions are settled by way of a non-prosecution or deferred prosecution agreement or a consent decree) and FCPA case law will surely follow.
Which means that a court will actually be called upon to construe FCPA elements and legal theories of liability.